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Difficulties in Making Implicit Government Risk-Bearing Partnerships Explicit

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  • Kane, Edward J

Abstract

This article explains how lobbying pressure intensifies tax-transfer inefficiencies in disaster prevention and relief. The social-welfare tradeoff in the government's joint provision of safety regulation and disaster relief is distorted by disinformational lobbying activity by disaster-exposed households and by conflict between principles of horizontal and vertical equity. Horizontal equity presupposes that no group of taxpayers wants to transfer wealth ex ante to equally wealthy disaster-exposed parties. But vertical equity implies that, when disaster strikes, households that were previously able to hide the mitigability of their exposure to a ratable hazard can nevertheless extract sizable transfers from other taxpayers ex post. Copyright 1996 by Kluwer Academic Publishers

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  • Kane, Edward J, 1996. "Difficulties in Making Implicit Government Risk-Bearing Partnerships Explicit," Journal of Risk and Uncertainty, Springer, vol. 12(2-3), pages 189-199, May.
    • Handle: RePEc:kap:jrisku:v:12:y:1996:i:2-3:p:189-99
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    Cited by:

    1. Jason Scott Johnston, 2012. "Disasters and Decentralisation," The Geneva Papers on Risk and Insurance - Issues and Practice, Palgrave Macmillan;The Geneva Association, vol. 37(2), pages 228-256, April.
    2. Barbieri, Stefano & Edwards, John H.Y., 2017. "Middle-class flight from post-Katrina New Orleans: A theoretical analysis of inequality and schooling," Regional Science and Urban Economics, Elsevier, vol. 64(C), pages 12-29.

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